As a result of completing this case, what is something that be learned from this case?
As a result of completing this case, what is something that be learned from this case?
The case study focuses on Mr. Hans Overmayer, the marketing vice president of Motofabrikverk S.A.'s Industrial Controls Division in Zurich, Switzerland, in 1983. The company was losing money in the numerical control market as a result of a drop in global demand for machine tools induced by the recession and fierce competition. Background information on the company, its products, research and manufacturing, and the numerical control industry is provided in the case study.
Based on the information provided, Moto appears to be a company that specialises in the production and selling of numerical controls (NCs), which are computerised devices that steer machine tools. The company entered the NC sector in 1962 and by 1983 was the third-largest commercial provider of NCs in Europe. However, Moto's Industrial Controls Division (ICD), which is in charge of the NC business, reported a 5% loss in sales in 1982 and again in the first six months of 1983. This was ascribed to the dramatic reduction in global demand for machine tools induced by the worst recession since the 1930s, as well as increased competition.
The company had to submit the 1984 development budget in early September, and it was unclear whether the $3 million required to keep the business running could be justified. Some experts saw the NC company as having huge potential, while others saw it as providing a significant entry into the future factory." Moto, with a strong position in electronic equipment and internal experience in manufacturing automation, was one of the few European companies that could compete effectively in the developing factory automation market.
Moto's organisation had expanded into a matrix, with both product divisions and country organisations, and each structure keeping profit and revenue numbers. Moto had seven product divisions, each led by a general manager, and 29 national organisations, each led by a country manager, with responsibility for all Moto products sold or manufactured in that country. Europe contributed for 65% of overall revenues, with the United States accounting for 22%.
In addition to the division product development staffs, the corporation possessed a large central research centre. A primary priority and source of pride was research. The budget for central research in 1982 was $650 million, or 7% of revenues. This initiative resulted in various technological improvements and the development of new products. Moto used the company's equipment, such as numerical controllers and minicomputers, and had created proprietary software and automation processes.
The machine tool sector was an important market for Moto's NC business, with machine tools largely sold in Europe, the United States, and Japan by OEMs who took great care in machine precision and reliability. The machines were sold to a variety of end-users, ranging from big, complex aviation and automobile manufacturers who shaped metal components on assembly lines to job shops that built workplaces in small batches or single pieces. In summary, Moto is a corporation that specialises in the manufacture and selling of numerical controls, as well as having a strong presence in electronic equipment and manufacturing automation. Due to the recession and increased competition, the company faced challenges in its NC business, and there were concerns about whether the $3 million required to maintain the business could be justified. Moto was structured as a matrix, with product divisions and country organisations, and research was a primary priority. Moto's NC business saw substantial growth in the machine tool industry, with machines sold to end-users ranging from large, sophisticated manufacturers to tiny job shops.
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